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UNIVERSITY  OF  ILLINOIS 

Agricultural  Experiment  Station 


BULLETIN  NO.  216 


THE  COST  OF  MILK  PRODUCTION 
COMPUTED  ON  THE  YEAR  BASIS 

BY  F.  A.  PEARSON 


TJBBANA,  ILLINOIS,  APEIL,  1919 


SUMMARY  OF  BULLETIN  No.  216 

INTRODUCTION. — In  studies  pertaining  to  the  cost  of  producing  milk,  a  clear 
distinction  must  be  made  between  milk  produced  for  city  trade  and  that  produced 
for  manufacturing  purposes.  The  present  study  is  confined  to  milk  produced  for 
direct  consumption  by  the  city  trade.  Page  343 

BASES  OF  CALCULATION. — There  are  three  bases  upon  which  the  cost  of  milk 
production  may  be  calculated;  namely,  the  farm,  the  herd,  and  the  cow. 

Page  344 

SOURCE  OF  DATA. — The  data  for  the  present  study  were  obtained  in  the 
fluid  milk  district  tributary  to  Chicago.  Page  345 

THE  FARM  AS  THE  UNIT. — Calculations  based  upon  total  farm  receipts  and 
disbursements  do  not  present  an  adequate  method  for  determining  the  cost  of 
milk  production,  as  the  milk  receipts  even  in  an  intensive  dairy  district  often 
represent  little  more  than  half  the  gross  farm  income.  Page  345 

THE  DAIRY  HERD  AS  THE  UNIT. — With  the  herd  as  the  basis  of  calculation, 
the  aggregate  value  of  2.42  hours  of  man  labor,  44  pounds  of  grain,  50  pounds 
of  hay,  188  pounds  of  silage,  and  39  pounds  of  other  roughage  approximately 
equaled  in  the  present  study,  the  net  year  cost  of  producing  one  hundred  pounds 
of  milk.  ,  Page  346 

Prices  of  whole  milk,  however,  cannot  be  constant  thruout  the  year.  A 
more  or  less  satisfactory  method  for  apportioning  costs  among  the  various  months 
of  the  year  is  to  use  as  a  basis  the  percentage  spread  in  the  price  paid  for  milk 
in  the  past.  Page  356 

THE  Cow  AS  THE  UNIT. — With  the  cow  as  the  basis  for  calculating  the  cost 
of  milk  production,  only  the  expense  of  maintaining  the  mature  cows  and  bulls 
and  the  returns  from  them  are  involved.  In  the  present  study  the  net  cost  of 
producing  one  hundred  pounds  of  milk  on  this  basis  was  found  to  approximate 
the  value  of  35  pounds  of  grain,  36  pounds  of  hay,  140  pounds  of  silage,  29 
pounds  of  other  roughage,  and  2.36  hours  of  labor;  plus  25.4  percent. 

Page  357 

CONCLUSIONS  Page  364 


Acknowledgment 

Credit  for  the  initiation  of  the  studies  of  which  this  bulletin  is  a  part,  is 
due  W.  J.  Fraser,  Professor  of  Dairy  Farming.  His  interest  having  been 
strongly  drawn  to  the  economic  side  of  dairy  farming,  he  early  became  convinced 
of  the  need  of  accurate  studies  in  the  cost  of  milk  production,  and  in  1912  Mr. 
B.  E.  Brand  was  placed  in  charge  and  Mr.  Pearson  was  secured  to  assist  in  these 
investigations.  Since  1914  Mr.  Pearson  has  been  in  charge.  The  present  pub- 
lication is  the  first  resulting  from  this  series  of  investigations. 

Eecognition  should  also  be  given  Messrs.  Frank  Turner  and  H.  K.  Eulison 
for  their  conscientious  application  in  the  collection  of  the  data  for  the  cow  and 
herd  cost  of  milk  production  and  for  their  constructive  suggestions. 


THE  COST  OF  MILK  PRODUCTION 
COMPUTED  ON  THE  YEAR  BASIS 

'    BY  F.  A.  PEAESON,  ASSOCIATE  IN  DAISY  HUSBANDRY 

INTRODUCTION 

This  bulletin  reports  the  results  of  investigations  into  the  cost 
of  producing  whole  milk  for  city  consumption,  with  56  percent  of 
the  total  produced  during  the  winter  months.  It  has  no  relation  to 
the  cost  of  producing  summer  milk  primarily  for  buttermaking  or 
to  the  cost  of  the  surplus  from  general  farming. 

Altho  the  business  of  dairying  appears  relatively  simple,  it  is  in 
reality  one  of  the  most  complicated  types  of  American  farming,  and 
the  problems  encountered  in  attempting  to  ascertain  the  actual  cost 
of  production  are  difficult  to  solve.  Much  confusion  has  arisen  from 
the  fact  that  the  difference  in  the  cost  of  producing  milk  for  city  trade 
and  producing  it  for  manufacturing  purposes  has  not  been  sufficiently 
recognized,  and  also  from  the  fact  that  the  different  methods  of  com- 
putation used  have  made  impossible  the  accurate  comparison  of  the 
studies  of  different  investigators. 

Milk  produced  for  urban  consumption  usually  sells  for  more  than 
it  is  worth  for  manufacturing  purposes.  Milk  used  for  manufactur- 
ing purposes  may  be  produced  far  from  market,  on  pasture,  which  is 
the  cheapest  feed,  and  the  finished  product  may  be  stored  for  winter 
use.  Owing  to  the  fact  that  whole  milk  is  bulky  and  perishable,  it 
must  be  produced  relatively  near  the  cities,  where  feeds  are  more  ex- 
pensive than  in  districts  more  remote.  Furthermore,  a  larger  propor- 
tion must  be  produced  in  the  winter  months  than  is  the  case  with  milk 
for  manufacturing  purposes.  This  also  leads  to  more  expensive  pro- 
duction, since  feeds  are  more  expensive  in  the  winter  than  in  the  sum- 
mer months. 

The  greater  part  of  the  dairy  products  sold  from  the  farm  are 
used  for  manufacturing  purposes  rather  than  for  direct  consumption 
in  the  form  of  whole  milk  by  the  urban  population.  The  dairy  pro- 
ducts used  for  manufacturing  purposes  are  usually  produced  from 
small  herds  where  dairying  is  a  side  issue  to  the  other  farm  activities. 

The  production  of  milk  for  direct  consumption  is  generally  re- 
stricted to  the  more  or  less  intensive  dairying  districts  adjacent  to  the 
larger  cities  and  forms  the  greater  proportion  of  the  total  farm 
business. 

343 


344  BULLETIN  No.  216  [April, 

Since  Chicago  is  the  largest  urban  center  within  the  state  and 
the  second  largest  milk-consuming  city  of  the  country,  it  was  deemed 
advisable  to  make  certain  detailed,  cost-accounting  studies  pertaining 
to  the  production  of  milk  in  the  surrounding  dairy  districts. 

Most  of  the  data  thus  far  published  have  been  expressed  in  terms 
of  dollars  and  cents.  As  values  are  constantly  changing,  much  of  the 
work  has  not  fulfilled  its  original  purpose.  In  order,  if  possible,  to 
eliminate  the  restrictions  placed  upon  a  study  by  fluctuating  values, 
it  was  thought  best  to  express  the  results  of  this  investigation  in  terms 
of  commodities  whenever  possible. 


There  are  at  least  three  bases  upon  which  the  cost  of  producing 
milk  may  be  calculated :  namely,  the  farm,  the  herd,  and  the  cow. 
From  the  data  secured  for  the  present  study  it  is  possible  to  calcu- 
late costs  from  each  of  these  various  points  of  view. 

By  "farm  cost"  of  milk  production  is  meant  the  cost  obtained  by 
a  method  in  which  all  farm  receipts  other  than  those  from  milk  are 
deducted  from  the  total  farm  expenses,  leaving  the  remaining  ex- 
penses to  represent  the  cost  of  milk  production.  In  case  the  receipts 
other  than  those  from  milk  are  almost  negligible,  this  appears  to  be 
a  satisfactory  method;  but  the  fact  is  that  under  the  conditions  of 
dairy  farming  in  Illinois  there  are  large  receipts  derived  from  sources 
other  than  milk.  To  use  this  "farm  cost"  method  would  in  some 
cases  be  no  more  legitimate  than  for  a  railroad  to  find  the  cost  of  haul- 
ing passengers  by  deducting  from  the  total  expense  of  operating  the 
railroads  all  receipts  other  than  those  for  hauling  passengers. 

By  "herd  cost"  of  milk  production  is  meant  the  cost  obtained  by 
a  method  in  which  the  herd  is  made  the  basis  of  calculation  and  the 
cattle  raising  that  accompanies  the  dairying  is  included  in  the  cost 
accounting.  One  objection  to  this  method  is  that  the  amount  of  feed 
which  goes  into  milk  production  cannot  be  ascertained  separately 
from  that  which  goes  into  growing  stock.  As  the  value  of  the  young 
stock  tends  in  general  to  increase  rapidly  with  age  and  the  milking 
stock  in  general  depreciates  with  age,  the  aggregate  amount  of  ap- 
preciation will  depend  upon  the  ratio  of  the  number  of  young  stock 
to  milch  cows. 

By  "cow  cost"  of  milk  production  is  meant  the  cost  obtained  by 
a  method  in  which  the  cow  is  the  unit  and  credit  is  given  for  the  value 
of  the  calves  when  dropped  but  the  raising  of  the  young  stock  is  made 
a  separate  part  of  the  business.  The  depreciation  in  the  value  of  the 
milch  cows  becomes  an  expense  of  production. 

One  advantage  of  the  cow  cost  is  that  it  permits  a  comparison  of 
results  secured  on  different  farms  in  the  same  or  in  different  regions, 


1919]  THE  COST  OF  MILK  PRODUCTION  345 

or  of  the  same  farms  or  different  farms  in  different  years.  The  dis- 
advantage of  the  herd  cost  lies  in  the  fact  that  the  amount  of  young 
stock  kept  varies,  and  comparisons  are  therefore  difficult  to  make. 

SOURCE  OF  DATA 

The"  data  presented  showing  the  farm  cost  of  milk  production 
were  secured  in  several  townships  in  Kane  and  McHenry  counties  in 
1911-12,  and  are  based  on  the  records  of  680  typical  dairy  farms  hav- 
ing a  total  of  19,802  cows  producing  for  sale  104,516,900  pounds  of 
milk.  The  average  amount  of  milk  sold  per  cow  was  5,279  pounds. 
Of  this,  57  percent  was  produced  during  the  six  winter  months  and 
43  percent  during  the  six  summer  months. 

The  data  for  herd  cost  were  secured  from  36  farms  located  in 
the  fluid  milk  district  tributary  to  Chicago.  They  do  not  involve  any 
of  the  farms  from  which  the  data  for  the  study  of  the  farm  cost  were 
secured.  The  36  farms  had  a  total  of  873  cows  producing  during  the 
fiscal  years  1914-15  and  1915-16,  5,683,992  pounds  of  milk  containing 
205,415  pounds  of  fat.  The  average  milk  sold  per  cow  during  the 
period  was  6,511  pounds.  This  milk  contained  235  pounds  of  fat, 
testing  3.61  percent.  Fifty-six  percent  was  produced  during  the  six 
winter  months  and  44  percent  during  the  remainder  of  the  year. 

The  data  for  cow  cost  were  secured  from  16  of  the  farms  from 
which  the  data  concerning  herd  cost  were  obtained.  These  16  farms 
had  a  total  of  428  cows  producing,  during  the  years  1914-15  and  1915- 
16,  2,924,164  pounds  of  milk  containing  104,144  pounds  of  fat.  The 
cows  produced  on  an  average  6,832  pounds  of  milk  and  243  pounds 
of  fat.  The  average  percentage  of  butter  fat  in  the  milk  was  3.56. 
Fifty-six  percent  of  the  milk  was  produced  in  the  six  winter  months 
and  44  percent  in  the  six  summer  months. 

THE  FARM  AS  THE  UNIT 

Many  persons  insist  that  the  farmer  should  have  but  one  profit 
in  dairy  farming,  and  that  the  farm  is  the  real  tinit  on  which  the  cost 
of  milk  production  should  be  calculated.  The  farmer 's  business,  how- 
ever, is  more  complicated  than  is  generally  realized,  and,  altho  not  so 
large  as  many  urban  industries  it  is  often  more  complex.  The  hog 
industry,  the  poultry  industry,  the  dairy  industry,  and  the  individ- 
ual crop  industries  are  all  separate  and  distinct  parts  of  farm  admin- 
istration, and  each  may  properly  show  a  profit. 

Using  the  data  secured  from  the  680  dairy  farms  in  Kane  and 
McHenry  counties,  it  is  possible  to  determine  the  approximate  farm 
cost  of  the  milk  which  they  produced.  Table  1  shows  this  method  of 
determining  the  cost  of  milk  production. 


346 


BULLETIN  No.  216 
TABLE  1. — THE  FARM  COST  OF  MILK  PRODUCTION 


[April, 


As  Secured  from  680  Dairy  Farms  in  Kane  and  McHenry  Counties,  Having  a 

Total  of  19,802  Cows  Producing  1,045,169  Hundredweight 

of  Milk:    1911-12 


Items  of  expense  and  return 

Amount 

Per  farm 

Per  cwt. 

Total  cash  outlay,  depreciation,  and 
unpaid  labor  

$1  692  675 

$2489 

$1.62 

Interest  on  operating  capital  at  5 
percent  

132  457 

195 

.13 

xRent  of  land  and  buildings  

380  316 

559 

.36 

'Farmer's  labor  

408  000 

600 

.39 

Total  expense  

$2  613  448 

$3843 

$2.50 

'Receipts  other  than  for  milk  

1  120  202 

1  647 

1.07 

Farm  cost  of  production  

$1  493  246 

$2  196 

$1.43 

1PThe  rent  charged  is  the  current  rate  paid  for  cash  rented  land. 

2The  farmers'  labor  is  estimated  at  $600,  which  is  the  equivalent  of  hired 
men's  wages. 

"The  receipts  other  than  those  for  milk  include  those  from  crops  and  live 
stock  sold,  increase  in  value  of  inventory,  and  receipts  for  miscellaneous  products. 

The  cost  of  production,  as  shown  by  this  method  of  calculation, 
was  $1,493,246  for  the  community,  $2,196  per  farm,  and  $1.43  per 
hundredweight  of  milk.  The  cash  received  for  this  milk  totaled 
$1,664,931  for  the  community;  $2,448  per  farm;  and  $1.60  per 
hundredweight. 

If  the  farms  studied  sold  nothing  but  milk,  the  farm  cost  might 
be  an  accurate  method  of  determining  the  cost  of  producing  the  milk. 
But  according  to  this  method,  the  farmer  would,  for  example,  make  no 
profit  on  his  hogs  in  a  good  year  and  suffer  no  loss  on  his  corn  crop 
if  the  community  suffered  from  a  drouth,  for  all  losses  or  gains  from 
the  various  enterprises  would  be  expressed  in  terms  of  milk.  On 
farms  with  a  variety  of  income  it  would  be  just  as  consistent  to 
analyze  the  cost  of  egg  production  in  this  way  as  to  use  it  to  deter- 
mine the  cost  of  milk  production.  The  farms  studied  were  in  a  very 
intensive  dairy  district,  and  yet  only  58  percent  of  the  receipts  were 
derived  from  the  sale'  of  milk. 

THE  DAIRY  HERD  AS  THE  UNIT 

When  the  herd  is  used  as  the  unit  for  studying  the  cost  of  milk 
production,  the  expense  of  rearing  young  stock  is  included  in  the  cost. 
The  total  expense  of  maintaining  the  herd  involves  eight  items :  feed, 
man  labor,  interest  on  live  stock,  horse  labor,  use  of  dairy  equipment, 
use  of  buildings,  and  miscellaneous  charges.  The  total  credits  to  the 
herd  involve  receipts  from  milk  sold,  milk  consumed  by  the  family, 
increase  in  stock,  manure,  and  miscellaneous  receipts. 


1919] 


THE  COST  OF  MILK  PRODUCTION 


347 


EXPENSES 
FEED 

On  the  thirty-six  farms  studied  from  the  standpoint  of  the  herd 
cost  of  milk  production,  feed  constituted  about  two-thirds  (66.05  per- 
cent) of  the  total  expense  of  maintaining  the  herd.  In  the  following 
tables  the  farm-raised  feeds  are  charged  to  the  dairy  herd  at  prevail- 
ing farm  values,  while  purchased  feeds  are  charged  at  the  purchase 

TABLE  2. — AMOUNT  AND  VALUE  OF  GRAIN  FED  TO  873  Cows,  35  BULLS,  AND  225 

YOUNG  STOCK  IN  THE  PRODUCTION  OF  5,683,992  POUNDS  OF  MILK 

CONTAINING  205,415  POUNDS  OF  FAT 


Grain 

Value 

Weight 
in 
pounds 

Value 
per 
cwt. 

Value 
per  cwt. 
of  milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Corn  

$7799.96 

817  777 

$0.95 

$0.1373 

14.3874 

Malt  

5029.65 

368  284 

1.36 

.0885 

6.4793 

Bran  

3206.29 

264  664 

1.21 

.0564 

4.6563 

Oats  

2812.05 

222  596 

1.26 

.0495 

3.9162 

Gluten       ......... 

2350.04 

157  432 

1.49 

.0413 

2.7697 

Ajax            

1  858  35 

109  344 

1.70 

.0327 

1.9237 

Cottonseed  meal.  .  .  . 
Barley  

1  495.69 
1  150.92 

96759 
79  194 

1.55 
1.45 

.0263 
.0203 

1.7023 
1.3933 

Oil  meal  

779.59 

44775 

1.74 

.0137 

.7877 

Victor  

674.15 

47489 

1.42 

.0119 

.8355 

White  Diamond.  .  .  . 
Middlings  

665.45 
547.37 

47700 
43  110 

1.40 
1.27 

.0117 
.0096 

.8392 
.7584 

Dairy  feed  

467.78 

32600 

1.43 

.0082 

.5735 

R.  K.  D  

443  45 

31  840 

1.39 

.0078 

.5602 

Hominy  

340.87 

25290 

1.35 

.0060 

.4449 

Sugar  feed  

278.63 

20475 

1.36 

.0049 

.3602 

Calf  meal  

192.91 

5010 

3.85 

.0034 

.0881 

Germ  meal  

179.99 

12000 

1.50 

.0032 

.2111 

Empire  

124.62 

11  725 

1.06 

.0022 

.2063 

Unicorn  

104.20 

5900 

1.77 

.0018 

.1038 

Shumacker  

82.15 

5  600 

1.47 

.0014 

.0985 

Rye  

62  25 

4980 

1.25 

.0011 

.0876 

Climax  

44.50 

3600 

1.24 

.0008 

.0633 

Akermane  

40.30 

2  660 

1.52 

.6007 

.0468 

Buckwheat 
middlings  

39.72 

4965 

.80 

.0007 

.0874 

Tip  Top  

36.40 

3  000 

1.21 

.0006 

.0528 

Chicago  

34.50 

3  375 

1.02 

.0006 

.0594 

Oat  meal  

17.45 

670 

2.60 

.0003 

.0118 

Rye  bran  

16.75 

1  275 

1.31 

.0003 

.0224 

Sucrene  

14.40 

800 

1.80 

.0003 

.0141 

Purina  

13.50 

1  200 

1.12 

.0002 

.0211 

HB  

13.00 

1  000 

1.30 

.0002 

.0176 

Molasses  

9.50 

675 

1.41 

.0002 

.0119 

BK  

9.60 

600 

1.60 

.0002 

.0106 

Sherwood  

9.09 

625 

1.45 

.0002 

.0110 

Cowpeas  

4.40 

440 

1.00 

.0001 

0077 

Special  

2.70 

200 

1.35 

.0001 

.0035 

Blood  meal  

1.20 

80 

1.50 

.00002 

.0014 

Oat  bran  

.73 

100 

.73 

.00001 

.0018 

Total  

$30954.10 

2  479  809 

$1.248 

$0.54473 

43.6279 

348 


BULLETIN  No.  216 


[April, 


price.  The  labor  of  delivering  these  feeds  to  the  farm  appears  un- 
der the  items  horse  labor  and  man  labor.  The  pasture  is  charged  to 
the  stock  at  the  prevailing  cash  rates  in  the  districts  studied. 

Grain. — The  873  cows  and  148  other  cattle  units1  involved  in  the 
production  of  the  milk  on  these  farms  consumed  2,479,809  pounds  of 
grain  valued  at  $30,954.10.  This  grain  represents  in  value  more  than 
one-third  (36.6  percent)  of  the  total  feed  given  to  the  herd. 

The  kinds  and  amounts  of  grain  fed  are  shown  in  Table  2.  Of 
the  total  feeds  classified  as  grain,  the  purchased  feeds  represent  in 
value  about  three-fifths  (61.8  percent)  and  the  farm-raised  feeds 
about  two-fifths  (38.2  percent). 

The  Illinois  dairyman  feeds  more  farm-raised  grains  than  the 
eastern  dairyman.  A.  L.  Thompson2  reports  that  98  percent  of  the 
value  of  grains  fed  to  cows  on  174  farms  in  New  York  in  1912  was 
purchased  and  2  percent  farm  raised.  In  Illinois  corn  is  the  most 
important  grain,  either  raised  or  purchased,  which  is  fed  to  dairy 
cows. 

Hay. — In  Table  3  are  presented  the  amounts  and  weights  of  the 
various  hays  fed  to  the  dairy  herds.  This  class  of  feed  represents  in 
value  about  one-fifth  (22.1  percent)  of  the  total  feed.  Alfalfa,  clover, 
timothy,  and  mixed  hay  formed  the  major  portion  of  the  feeds  classi- 
fied as  hay. 

The  consumption  of  hay  per  hundredweight  of  milk  was  50.16 
pounds.  This  hay  is  valued  at  65.6  cents  per  hundredweight,  which 
leads  to  a  cost  of  33  cents  for  hay  per  hundredweight  of  milk 
produced. 

TABLE  3. — AMOUNT  AND  VALUE  OF  HAY  USED  IN  THF  PRODUCTION  OF  5,683,992 
POUNDS  OF  MILK  (ETC,) 


Hay 

Value 

Weight 
in 
pounds 

Value 
per 
cwt. 

Value 
per  cwt. 
of  milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Alfalfa  

$10687.43 

1  545  095 

$0.69 

$0.1879 

27.1833 

Clover  hay  

2885.49 

479  300 

.60 

.0508 

8.4324 

Timothy  hay  

2445.60 

355  145 

.69 

.0430 

6.2482 

Mixed  hay  

2444.38 

411  725 

.59 

.0430 

7.2436 

Millet  hay.  .  .    

66.00 

16000 

.41 

.0012 

.2815 

Barley  hay   

32.00 

8000 

.40 

.0006 

.1407 

Oat  hay  

24.00 

4  000 

.60 

.0004 

.0704 

Oat  and  pea  hay  .  .  . 
Pea  hay  

60.00 
30.00 

10000 
6  500 

.60 
.46 

.0011 
.0005 

.1759 
.1144 

Wild  hay  

38.00 

15400 

.25 

.0007 

.2709 

Total  

$18712.90 

.    2  851  165 

$0.656 

$0.3292 

50.1613 

1One  cow,  one  bull,  or  two  head  of  young  stock  are  considered  a  cattle  unit. 
Two  hundred  and  twenty-five  young  stock  and  35  bulls  are  equivalent  to  148 
cattle  units. 

"Thompson,  A.  L.  Cost  of  Producing  Milk  on  174  Farms  in  Delaware  County, 
New  York.  Agr.  Exp.  Sta.,  Cornell  University.  Bui.  364,  page  124.  1915. 


1919] 


THE  COST  OF  MILK  PRODUCTION 


349 


Succulent  Feeds. — Silage,  green  corn,  and  hays  which  were  cut 
and  fed  green  are  classified  as  succulent  feeds.  These  feeds  represent 
in  value  one-fourth  (25.8  percent)  of  the  total  feeds  used.  In  Table  4 
are  shown  the  amounts  and  values  of  these  feeds. 


TABLE  4. — AMOUNT  AND  VALUE  OF  SUCCULENT  FEEDS  USED  IN  THE  PRODUCTION 
OF  5,683,992  POUNDS  OF  MILK  (ETC.) 


Amount 

Weight 

Value 

Value 

fed  per 

Succulent  feed 

Value 

in 

per 

per  cwt. 

cwt.  of 

pounds 

cwt. 

of  milk 

milk,  in 

pounds 

Silage  

$20836.84 

9  940  800 

$0.21 

$0.3665 

174.8911 

Green  alfalfa  

60.00 

20000 

.30 

.0011 

.3519 

Wet  hay  

2.00 

400 

.50 

.00004 

.0070 

Green  oat  hay  

20  00 

10000 

.20 

.0004 

.1759 

Green  corn  

929.00 

712  600 

.13 

.0163 

12.5370 

Total.  . 

$21  847.84 

10  683  800 

$0.204 

$0.38434 

187.9629 

Other  Roughage. — In  the  present  study  it  was  difficult  to  dis- 
tinguish between  corn  stalks  and  corn  fodder  used  as  bedding  and 
that  used  as  feed.  Many  farmers  feed  the  cows  corn  stalks  and  fod- 
der, and  after  the  edible  portion  is  consumed  the  remainder  is  pushed 
back  under  the  cows  for  bedding.  In  Table  5  are  presented  the 
amounts  and  values  of  these  commodities  so  far  as  it  was  possible 
to  classify  them. 

TABLE  5. — AMOUNT  AND  VALUE  OF  "OTHER"  ROUGHAGE  USED  IN  THE  PRODUCTION 
OF  5,683,992  POUNDS  OF  MILK  (ETC.) 


Roughage 

Value 

Weight 

Value 
per 
cwt. 

Value 
of  feed 
per  cwt. 
of  milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Corn  fodder  

$3  642.21 

1  478  430 

$0.25 

$0.0641 

26.0100 

Oat  straw  

1  344  27 

636  370 

.21 

.0237 

11.1958 

Wheat  straw  

94.25 

37500 

.25 

.0017 

.6597 

Barley  straw.    . 

77  75 

33  000 

.24 

0014 

.5806 

Clover  straw  

35.00 

30000 

.12 

.0006 

.5278 

Timothy  straw  

29.00 

11  400 

.25 

.0005 

.2006 

Rye  straw  

10.00 

4000 

.25 

.0002 

.0704 

Shavings  

6.00 

10000 

.06 

.0001 

.1759 

Total  

$5  238.48 

2  240  700 

$0.234 

$0.0923 

39.4208 

Pasture. — Pasture  represents  but  8  percent  of  the  total  value  of 
the  feed  consumed  by  the  thirty-six  herds.  Table  6  shows  the,  vari- 
ous classes  of  pasture  and  the  value  of  each. 

The  blue-grass  pasture  constituted  84.4  percent  of  the  value  of 
the  total  pasture.  The  other  pastures  classified  as  oat  stubble,  wheat 
stubble,  barley  stubble,  and  corn  stalks  represent  largely  gleanings 
and  a  little  volunteer  grass  or  new  seedings.  Timothy,  alfalfa,  clover, 


350 


BULLETIN  No.  216 


[April, 


TABLE  6. — VALUE  OF  PASTURE  USED  IN  THE  PRODUCTION  OF  5,683,992  POUNDS 

OF  MILK  (ETC.) 


Pasture 

Value 

Value  per  cwt. 
of  milk 

Blue  grass  

$5738.06 

$0  10095 

Oat  stubble  

233.00 

00410 

Clover  

203.86 

.00359 

Corn  stalk  

174.80 

.00308 

Timothy  

166.50 

.00293 

Alfalfa  

129.80 

.00228 

Mixed  hay  

97.50 

.  00172 

Wheat  stubble  

40.00 

.00070 

Barley  stubble  

12.00 

.00021 

Total  

$6795.52 

$0.11956 

and  mixed-hay  pastures  usually  come  after  the  crops  have  been  cut. 
Altho  the  pastures  other  than  blue  grass  represent  but  15.6  percent 
of  the  total  value  of  all  pasture,  they  are  of  considerable  importance, 
for  they  come  at  different  periods  thruout  the  pasture  season  and 
enable  the  farmer  to  rotate  his  fields.  These  stubble  fields  and  cut- 
over  hay  fields  form  excellent  pasture  for  short  periods  when  the  blue 
grass  is  dried  up. 

Miscellaneous  Feeds. — These  represent  in  value  less  than  2  per- 
cent of  the  total  feed.  In  Table  7  are  shown  the  amount  and  value  of 
each.  The  skim  milk,  which  was  purchased,  was  the  most  impor- 
tant item. 

TABLE  7. — AMOUNT  AND  VALUE  OF  MISCELLANEOUS  FEEDS  USED  IN  THE 
PRODUCTION  OF  5,683,992  POUNDS  OF  MILK  (ETC.) 


Feed 

Value 

Weight 
in 
pounds 

Value 
per 
cwt. 

Value 
per  cwt. 
of  milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Skim  milk  

$826.91 

315  373 

$0.26 

$0.0145 

5.5484 

Wet  malt  

161.82 

40405 

.40 

.0028 

.7109 

Cottonseed  hulls..  .  . 

16.21 

5650 

.29 

.0003 

.0994 

Total  

$1  004.94 

361  428 

$0.0176 

Feed  Summary. — The  total  amounts  and  value  of  all  feed  and 
forage  entering  into  the  production  of  the  milk  from  the  thirty-six 
farms  under  discussion,  are  summarized  in  Table  8. 

The  total  feed  required  to  produce  the  5,683,992  pounds  of  milk 
is  valued  at  $84,553.78,  or  $1.49  per  hundredweight  of  milk. 


1919] 


THE  COST  OF  MILK  PRODUCTION 


351 


TABLE  8.— SUMMARY  OP  ALL  FEEDS  FED  TO  873  Cows,  35  BULLS,  AND  225 

YOUNQ  STOCK  IN  THE  PRODUCTION  OP  5,683,992  POUNDS  OP  MILK 

CONTAINING  205,415  POUNDS  OP  FAT 


Feed 

Value 

Weight 
in 
pounds 

Value  per 
cwt.  of 
milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Grain  

$30  954  10 

2  479  809 

$  5447 

43.63 

Succulent  feeds  

21  847  84 

10  683  800 

3843 

187.96 

Hay  

18712.90 

2  851  165 

.3292 

50.16 

Other  roughage  . 

5  238  48 

2  240  700 

0922 

39  42 

Pasture  

6795.52 

.1196 

Skim  milk  

826.91 

315  373 

.0145 

5.54 

Other  feeds  

178.03 

46055 

.0031 

.81 

Total  

$84553.78 

$1.4876 

LABOR 

Next  to  feed,  man  labor  is  the  most  expensive  factor  entering  into 
the  production  of  milk.  It  includes  the  time  spent  in  milking,  in  feed- 
ing, cleaning  out  barns,  hauling  feed,  hauling  milk,  etc.  Horse  labor 
includes  the  time  spent  in  hauling  milk  and  feed,  etc. 

Man  labor  and  horse  labor  do  not  include  labor  required  in  the 
production  of  crops  or  in  the  maintenance  of  other  live  stock. 

TABLE  9. — NUMBER  OP  HOURS  AND  VALUE  OF  LABOR  USED  IN  THE  PRODUCTION 
OP  5,683,992  POUNDS  OP  MILK  (ETC.) 


Kind  of  labor 

Value 

Number 
of  hours 

Rate  per 
hour  in 
cents 

Value 
of  labor 
per  cwt. 
of  milk 

Hours  of 
labor  per 
cwt.  of 
milk 

Man  

$21  750  12 

137  792.25 

15  7847 

$0.3826 

2  .  4240 

Horse  

4408.79 

28225.00 

15.6200 

.0776 

.4965 

In  the  data  presented  (Table  9)  man  labor  represents  17  per- 
cent of  the  total  expense  of  producing  milk  and  horse  labor  3  percent. 
The  average  cost  of  man  labor  was  15.78  cents  per  hour,  and  2.42  hours 
were  required  to  produce  one  hundred  pounds  of  milk.  The  aver- 
age rate  per  hour  for  the  horse  labor  was  15.6  cents,  one-half  hour  of 
which  was  necessary  in  the  production  of  one  hundred  pounds  of  milk. 

EQUIPMENT 

The  dairy  equipment  includes  milking  machines,  milk  carts,  pails, 
strainers,  can  scales,  etc.  The  cost  of  the  dairy  equipment  constituted 
less  than  2  percent  (1.27  percent)  of  the  total  expense  of  producing 
the  milk,  and  amounted  on  the  average  to  about  3  cents  per  hundred- 
weight of  milk. 

Depreciation  represents  54  percent  of  the  total  equipment  cost, 
and  about  one-fifth  (20.59  percent)  of  the  value  of  the  equipment 


352 


BULLETIN  No.  216 


[April, 


TABLE  10. — TOTAL  COST  OF  DAIRY  EQUIPMENT  USED  IN  THE  PRODUCTION  OF 
5,683,992  POUNDS  OF  MILK  (ETC.) 


Value  of  equipment  at  beginning  of  the  period  .  .  . 
New  equipment  

$4288.02 
2  133.57 

Initial  inventory  and  purchases  

$6  421.59 

Value  of  equipment  at  end  of  period  

$5  150.76 

Equipment  sold   

388.10 

Final  inventory  and  sales  

5  538.86 

Depreciation  

CQOO    70 

Repairs    

$494.70 

Taxes  

8.44 

Interest  on  average  value  of  equipment  ($4,719.35 
at  5  percent)  

235.96 

739  .  10 

Net  cost  of  operation  

$1  621.83 

at  the  beginning  of  the  period.    Repairs  constituted  30  percent  of  the 
equipment  cost ;  interest,  15  percent ;  and  taxes,  less  than  one  percent. 

MISCELLANEOUS  EXPENSES 

The  miscellaneous  expenses  include  insurance,  taxes  on  stock, 
grinding  farm  feeds,  registration,  testing  fees,  veterinary  fees,  breed- 
ing fees,  commissions,  coal,  salt,  acid,  medicine,  dehorning,  fly  pro- 
tector, whitewash,  etc.  They  amounted  to  a  total  of  $4,876.04,  or 
8.6  cents  per  hundredweight  of  milk,  and  constituted  3.8  percent 
of  the  gross  expense  of  milk  production. 

INTEREST  ON  VALUE  OF  LIVE  STOCK 

Interest  includes  the  annual  charge  for  the  use  of  the  capital  in 
the  form  of  live  stock.  The  average  inventory  value  in  the  present 
study  was  $124,836.82 ;  at  5  percent,  the  interest  charge  is  $6,241.84, 
or  about  11  cents  per  hundredweight  of  milk. 

BUILDINGS 

The  building  charge  includes  insurance,  depreciation,  interest  on 
capital  invested,  cash  repairs,  labor  repairs,  paint,  rent  for  the  water 
system,  etc.  The  total  charge  for  buildings  usually  constitutes  from 
8  to  10  percent  of  the  value  of  the  buildings  and  5  percent  of  the  net 
cost  of  milk  production.  In  this  study  it  amounted  to  $4,563.65, 
representing  3.6  percent  of  the  total  gross  expense. 


1919} 


THE  COST  OP  MILK  PRODUCTION 


353 


RETURNS  TO  THE  DAIRY  HERD 

The  returns  to  the  dairy  herd  involve  receipts  from  milk  sold, 
milk  used  by  the  household,  miscellaneous  returns,  and  manure.  All 
returns  other  than  for  milk  are  deducted  from  the  gross  expense. 

MILK. 

The  milk  sold  represents  three-fourths  (75.2  percent)  of  the  total 
income  from  the  dairy  herd. 

During  the  period  of  this  study  5,527,069  pounds  of  milk  were 
sold  and  156,923  pounds  were  consumed  by  the  household.  The  total 
value  of  the  milk  sold  and  that  consumed  by  the  family  was  $95,525.11. 
The  average  price  received  for  all  milk  sold  was  $1.68  per  hundred- 
weight. 

STOCK 

In  using  the  herd  as  the  basis  of  calculation,  it  must  be  borne  in 
mind  that  the  increase  in  the  value  of  the  young  stock  may  be  greater 
or  less  than  the  depreciation  in  the  value  of  the  milking  stock,  accord- 
ing to  the  policy  of  the  dairyman.  If  it  proves  to  be  greater,  as 
was  the  case  in  this  study,  then  the  net  increase  in  the  aggregate 
value  of  all  the  stock  appears  as  an  item  of  income. 

In  Table  11  is  shown  the  stock  transactions  during  the  period  of 
the  study.  During  the  year,  13  cows  died  and  281  cows  were  sold. 
This  represents  an  annual  turnover  of  32  percent.  During  the  same 
period  116  cows  were  purchased  and  180  heifers  freshened.  The  total 
increase  in  the  value  of  the  stock  ($18,231.73)  constituted  14.73  per- 

TABLE  11. — KINDS,  NUMBER,  AND  VALUE  OP  STOCK  USED  IN  THE  PRODUCTION 
OF  5,683,992  POUNDS  OP  MILK  (ETC.) 


Kind  of  stock 

Number 

Total  value 

Cows  and  bulls  at  beginning  of  period  

907 
116 
180 
185 
251 
311 
27 
19 

$88901.00 
11218.04 
14520.00 
13390.00 
12340.00 
8745.07 
1  657.20 
265.00 

Cows  bought  

Heifers  freshened  

Two-year-old  heifers  at  beginning  of  period  

One-year-old  heifers  at  beginning  of  period  

Calves  at  beginning  of  period  

Heifers  bought  .  .        

Calves  bought  

1  996 

$151  036.31 

Cows  and  bulls  at  end  of  period  .'  

909 
281 
180 
196 
268 
293 
100 
436 

$88437.00 
18384.06 
14520.00 
12663.00 
14692.00 
10505.57 
5925.20 
4  141.21 

Cows  and  bulls  sold  during  period  

Heifers  freshened  in  period  

Two-year-old  heifers  at  end  of  period  

One-year-old  heifers  at  end  of  period  

Calves  at  end  of  period  

Heifers  sold  

Calves  sold  

Final  stock  plus  sales  

2663 

$169268.04 

Net  increase  

667 

$18231.73 

354  BULLETIN  No.  216  [April, 

cent  of  the  gross  income  from  the  dairy  herds.    In  terms  of  milk,  it 
amounted  to  approximately  32  cents  per  hundredweight. 

It  should  be  explained  that  the  actual  market  value  of  the  cows 
and  bulls  at  the  end  of  the  period  was  $4,283  greater  than  shown  in 
Table  11,  but  as  this  amount  was  the  result  of  appreciation  in  the 
general  price  level  and  not  to  appreciation  in  the  value  of  the  cows 
themselves,  the  cows  were  inventoried  at  the  end  of  the  period  at 
the  values  prevailing  at  the  beginning  of  the  period. 

MANURE 

The  simplest  method  of  calculating  the  value  of  the  manure  is  to 
consider  only  the  manure  hauled  from  the  barns  to  the  fields.  The 
total  value  of  this  manure,  estimated  at  $1  per  load,  amounted  to 
$9,440.10.  The  labor  in  hauling  the  manure  is  charged  to  the  crops, 
and  not  to  the  stock.  Manure  dropped  on  pastures  is  not  included 
in  this  valuation  since  ordinary  pasture  rentals  of  $1  to  $2  per  head 
per  month  assume  the  return  of  that  amount  of  fertility. 

MISCELLANEOUS  CREDITS 

Miscellaneous  credits  form  a  very  small  part  of  the  total  returns 
from  the  dairy  herds.  The  major  items  are  sacks,  bull  service,  hides, 
beef,  and  hauling.  The  total  returns  under  this  heading  amounted  to 
only  $572.27,  which  is  but  one  cent  per  hundredweight  of  milk. 

NET  HERD  COST 

The  summary  of  the  important  factors  of  expense  and  of  returns 
not  milk  are  presented  in  Table  12.  Feed  is  the  most  important  item, 
constituting  two-thirds  (66.05  percent)  of  the  gross  expense.  The 
feed  cost  per  cow  was  $96.85,  or  $1.49  per  hundredweight  of  milk, 
and  the  labor,  $24.91,  or  38  cents  per  hundredweight  of  milk.  Man 
labor  constituted  about  one-sixth  (16.99  percent)  of  the  gross  expense. 

The  total  expenses  other  than  man  labor  and  feed,  except  pasture, 
aggregated  $.5016  per  hundredweight  of  milk  (horse  labor,  $.0776; 
equipment,  $.0285 ;  interest,  $.1098 ;  buildings,  $.0803 ;  pasture, 
$.1196;  and  miscellaneous  expense,  $.0858).  The  total  returns  not 
milk  (stock,  $.3208;  manure,  $.1661;  and  miscellaneous  returns, 
$.0100)  aggregated  $.4969  per  hundredweight  of  milk,  an  amount  ap- 
proximately equal  to  the  total  expenses  other  than  man  labor  and  feed, 
except  pasture.  The  net  cost  of  producing  milk  on  these  farms  is  then 
roughly  equal  to  the  sum  of  the  man  labor  and  the  total  feed  exclu- 
sive of  pasture. 

In  Table  13  is  presented  a  summary  of  the  man  labor  and  of  the 
feed,  except  pasture,  involved  in  the  production  of  the  5,683,992 
pounds  of  milk. 


1919] 


THE  COST  OF  MILK  PRODUCTION 


355 


TABLE  12. — SUMMARY  OP  TOTAL  EXPENSE  AND  OF  RETURNS  NOT  MILK  INVOLVED 
IN  THE  PRODUCTION  OF  5,683,992  POUNDS  OF  MILK  (ETC.) 

EXPENSES 


Total 

Percent 
of 
total 

Per  cwt.  of 
milk 
produced 

Feed  other  than  pasture  

$77  758.26 

60.74 

$1.3679 

Pasture  

6795.52 

5.31 

.1196 

Man  labor  

21  750.12 

16.99 

.3827 

Interest  on  herd  

6241.84 

4.88 

.1098 

Miscellaneous  

4876.04 

3.80 

.0858 

Horse  labor  

4408.79 

3.44 

.0776 

Buildings  •.  

4563.65 

3.57 

.0803 

Equipment  

1621.83 

1.27 

.0285 

Total  

$128016.05 

100.00 

$2.2522 

RETURNS  NOT  MILK 


Appreciation  of  stock  

$18231.73 

$.3208 

Manure     

9440.10 

.1661 

Miscellaneous  

572.27 

.0100 

Total  

$28244.10 

$.4969 

NET  YEARLY  HERD  COST  ........ 

$99771.95 

$1.7553 

TABLE  13. — AMOUNT  AND  VALUE  OF  MAN  LABOR  AND  OF  FEED,  EXCEPT  PASTURE, 
USED  IN  THE  PRODUCTION  OF  5,683,992  POUNDS  OF  MILK  (ETC.) 


Value 

Amount 

Value 
per  cwt. 
of  milk 

Amount 
per  cwt. 
of  milk 

Man  labor  

$21  750.12 

137792.25hrs. 

$0.3826 

2.42hrs. 

Grain  

30954.10 

2  479  809.  00  Ibs. 

.5447 

43.  63  Ibs. 

Silage  

21  847.84 

10  683  800.  00  Ibs. 

.3843 

187.  96  Ibs. 

Hay  

18712.90 

2851  165.  00  Ibs. 

.3292 

50.  16  Ibs. 

Other  roughage  

5238.48 

2  240  700.  00  Ibs. 

.0922 

39.  42  Ibs. 

Miscellaneous  feeds  .  . 

1  004.94 

361  428.  00  Ibs. 

.0176 

6.  36  Ibs. 

Total  

$99508.38 

$1.7506 

Owing  to  the  fact  that  values  are  constantly  changing,  it  seems 
necessary  that  results  be  expressed  in  terms  of  commodities  whenever 
possible.  The  items  of  feed  and  man  labor  are  most  easily  expressed 
in  this  way :  man  labor  in  terms  of  hours,  and  feed,  except  pasture, 
in  terms  of  pounds.  Since  the  feeds  listed  as  miscellaneous1  form  a 
relatively  small  proportion  of  the  total  feed  used,  they  may  be  dis- 
regarded in  forming  a  simple,  practicable,  and  comparatively  accu- 
rate method  for  arriving  at  the  approximate  cost  of  milk  production. 
For  practical  purposes  the  following  amounts  of  feed,  forage,  and  man 
labor  represent  the  complete  net  cost  of  producing  one  hundred 
pounds  of  milk,  and  their  use  as  a  general  formula  offers  a  simple 
basis  for  computing  the  approximate  year  cost  of  milk  production: 


Table  7. 


356  BULLETIN  No.  216 


Grain  ..............  ....  44  pounds         Hay  ...............  50  pounds 

Silage  ..................  188  pounds        Other  roughage  .....  39  pounds 

Man  labor  ..............     2  .  42  hours 

In  using  these  items  as  a  basis  for  calculating  the  expense  of  pro- 
ducing one  hundred  pounds  of  milk,  it  is  assumed  that  as  the  prices 
of  feeds  and  labor  rise  or  fall  the  other  items  of  expense  and  return 
fluctuate  more  or  less  in  the  same  proportion.  For  instance,  equip- 
ment, buildings,  interest,  pasture,  and  miscellaneous  expenses  fluctu- 
ate in  proportion  to  the  value  of  manure,  the  increase  in  stock,  and 
miscellaneous  returns.  Altho  there  is  probably  no  time  when  they 
fluctuate  in  exact  unison,  they  keep  close  enough  together  for  prac- 
tical purposes  of  computation.  It  is  also  assumed  that  the  amount 
fed  was  not  far  from  that  which  was  physiologically  most  efficient 
under  the  prevailing  conditions. 

This  method  operates  as  follows:  Assuming  the  value  of  grain 
to  be  $55  per  ton;  hay,  $10  per  ton;  silage,  $6  per  ton;  and  man 
labor,  25  cents  per  hour,  we  have: 

Grain  .......................  44  Ibs.          @  $55  per  ton    =  $1.21 

Silage....*.  ..................  188  Ibs.         @     6  per  ton    =     .56 

Hay  .......  .................  50  Ibs.         @    10  per  ton    =     .25 

Other  roughage  ..............  39  Ibs.         @     6  per  ton    =     .12 

Man  labor    ...................     2.42  hours  @  25c  per  hour  =      .61 

Yearly  herd  cost  of  milk  per  hundredweight  ............  $2.75 

SEASONAL  VARIATIONS  IN  THE  COST  OF  PRODUCTION 

The  application  of  current  values  to  the  hours  of  labor  and 
pounds  of  grain  produces  a  result  termed  the  "year  cost"  of  milk 
production,  which  does  not  represent  the  cost  at  any  one  season  of 
the  year.  A  more  or  less  satisfactory  method  of  distributing  the 
year  cost  over  the  various  months  is  to  use  the  relative  percentage 
variations  in  the  prices  paid  for  milk  during  the  different  months  of 
the  year  at  the  market  to  which  the  milk  was  delivered.  The  buyers 
of  milk  desire  a  constant  supply  thruout  the  year,  and  it  may  be 
assumed,  therefore,  that  prices  have  been  adjusted  to  stimulate  the 
production  of  the  desired  amount  each  month  of  the  year.  The  per- 
centage variation  by  months,  of  the  average  annual  Chicago  price1  of 
milk  for  the  ten  years  1907-1916,  was  as  follows: 

Month  Percentage  Month  Percentage 

variation  variation 

January  ........................  119.0  July  .........................  83.7 

February  .......................  114.3  August  .......................  94.2 

March  .........................  106.5  September  ....................  96.7 

April  ..........................  94.2  October  ......................  109.2 

May  ...........................  73.2  November  ....................  118.3 

June  ...........................  70.6  December  ....................  120.3 

'Milk  News. 


1919}  THE  COST  OF  MILK  PRODUCTION  357 

It  will  be  noticed  that  the  December  price  is  the  highest,  being 
20.3  percent  above  the  average  price.  The  August  price  is  5.8  per- 
cent less  than  the  average  price.  From  December  to  June  (the  month 
of  the  lowest  average)  there  is  a  variation  of  49.7  percent. 

If  it  is  assumed  that  the  year  cost  of  milk  production  is  $2.75  pel- 
hundredweight,  as  shown  on  page  346,  and  the  percentage  deviations 
shown  above  are  applied,  the  cost  for  January  would  be  found  to  be 
$3.27  per  hundredweight  ($2.75X1-19=$3.27)  ;  the  cost  for  August, 
$2.59  per  hundredweight  ($2.75X-942=$2.59)  ;  etc. 

The  so-called  monthly  spread,  monthly  deviation,  or  monthly  dif- 
ferential is  based  on  the  fact  that  a  December  price  20.3  percent  above 
the  average  year  price  and  a  June  price  29.4  percent  less  than  the 
average  year  price,  with  the  intervening  months  gradually  approach- 
ing these  extremes,  produced  in  the  past  the  desired  volume  of  milk 
each  month  of  the  year,  and  therefore  must  have  been  somewhat  com- 
mensurate with  the  cost. 

THE  COW  AS  THE  UNIT 

When  the  cow  is  made  the  basis  for  calculating  the  cost  of  milk 
production,  the  cost  of  rearing  young  stock  to  mature  cows  is  elimi- 
nated. There  are  eight  items  of  expense  taken  into  consideration; 
namely,  feed,  man  labor,  depreciation,  horse  labor,  interest  on  value 
of  stock,  buildings,  miscellaneous,  and  dairy  equipment,  and  they 
are  of  importance  in  the  order  named.  There  are  three  items  of 
return  other  than  milk;  namely,  manure,  calves,  and  miscellaneous. 

The  data  used  for  this  study  are  a  part  of  the  data  obtained  for 
the  study  pertaining  to  herd  cost,  but  since  some  of  the  latter  do  not 
permit  of  a  separation  of  cow  feed  from  young  stock  feed,  it  is  im- 
possible to  include  all  in  the  cow  cost  study. 

EXPENSES 
FEED 

In  the  cost  of  maintaining  a  cow,  feed  is  the  most  important 
factor.  The  farm-raised  feeds  involved  in  this  study  are  charged  to  the 
cows  at  the  prevailing  farm  values  and  not  at  the  cost  of  their  produc- 
tion. Purchased  feeds  are  charged  at  actual  market  values.  The  man 
labor  and  horse  labor  required  to  deliver  these  commodities  to  the 
farms  are  charged  under  the  items  man  labor  and  horse  labor. 

Grain. — The  value  of  the  grain  fed  the  446  cattle  units  involved 
in  the  production  of  the  2,924,164  pounds  of  milk  constituted  39  per- 
cent of  the  total  value  of  the  feed  used. 

About  40  percent  of  the  total  grains  were  farm-raised.  Of  these, 
the  value  of  the  corn  represents  somewhat  less  than  two-fifths  of  the 


358 


BULLETIN  No.  216 


[April, 


TABLE  14.— AMOUNT  AND  VALUE  OF  GRAIN  CONSUMED  BY  428  Cows  AND  18  BULLS 
(446  CATTLE  UNITS)  IN  THE  PRODUCTION  OF  2,924,164  POUNDS  OF 
MILK  CONTAINING  104,144  POUNDS  OF  FAT 


Grain 

Value 

Weight  in 
pounds 

Value  per 
cwt.  of 
milk 

Amount 
per  cwt. 
of  milk, 
in  pounds 

Corn  

$4  369.10 

480  016 

$0  1494 

16  4154 

Malt  

2  113  47 

158  463 

0723 

5  4191 

Bran  

961.08 

75  179 

.0329 

2.5710 

Gluten  

715.69 

46873 

.0245 

1.6030 

Cottonseed  meal  

704.00 

43388 

.0241 

1.4838 

Ajax  

631  39 

37  993 

0216 

1  2993 

White  Diamond  

592  42 

42  465 

0203 

1  4522 

Oil  meal  

474.80 

27470 

.0162 

.9394 

Barley  

402  65 

30606 

.0138 

1.0467 

Oats  

345  56 

25  989 

0118 

.8888 

Hominy    

253  71 

18  797 

0087 

.6428 

Middlings  

115.20 

8091 

.0039 

.2767 

Victor  

44.48 

3308 

.0015 

.1131 

Sugar  feed  

44  41 

3  617 

.0015 

.1237 

Buckwheat  bran  

32  92 

4  115 

0011 

.1407 

Purina  

13.50 

1  200 

.0005 

.0410 

Buckwheat  middlings  .... 
Schumacker  .•  

9.60 
9  09 

600 
625 

.0003 
.0003 

.0205 
.0214 

Stock  feed   .        

9  00 

200 

0003 

.0068 

Cottonseed  hulls  

7.48 

2607 

.0003 

.0892 

Cowpeas  

4.40 

440 

.0001 

.0151 

Molasses  feed  

2  39 

111 

.0001 

.0038 

Oat  bran  

.73 

100 

.0000 

.0034 

Total  

$11857.07 

1  012  253 

$0.4055 

34.6169 

value  of  the  total  grain  feed.  The  value  of  the  malt  represents  some- 
what more  than  one-third  of  the  value  of  the  purchased  grains. 
Thirty-five  pounds  of  grain,  costing  41  cents,  were  required  to  produce 
one  hundred  pounds  of  milk. 

Succulent  Feeds. — In  Table  15  is  shown  the  amount  and  value  of 
the  succulent  feeds.  The  cost  of  these  feeds  constituted  about  one- 
fourth  (25.9  percent)  of  the  total  cost  of  all  feeds,  and  the  cost 
of  the  silage  represents  more  than  nine-tenths  of  the  total  cost  of  the 
succulent  feeds.  Of  the  succulent  feeds  used  per  hundred  pounds  of 
milk  produced,  9  pounds  were  green  corn  and  131  pounds  were  silage. 
The  average  cost  of  succulent  feeds  per  hundredweight  of  milk  pro- 
duced was  27  cents. 

TABLE  15. — AMOUNT  AND  VALUE  OF  SUCCULENT  FEEDS  USED  IN  THE  PRODUCTION 
OF  2,924,164  POUNDS  OF  MILK  (ETC.) 


Succulent  feed 

Value 

Weight 
in 
pounds 

Value  per 
cwt.  of 
milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Silage  

$7  580.16 

3  831  452 

$0.2592 

131.0346 

Green  corn  

385.00 

265000 

.0132 

9.0630 

Total  

$7965.16 

4  096  452 

$0.2724 

140.0976 

1919] 


THE  COST  OF  MILK  PRODUCTION 


359 


Hay. — About  one-fourth  (22.2  percent)  of  the  value  of  the  total 
feeds  used,  was  hay.  The  more  important  hays  were  alfalfa,  clover, 
timothy,  and  mixed.  About  36  pounds  (35.7)  were  used  in  producing 
one  hundred  pounds  of  milk. 

TABLE  16. — AMOUNT  AND  VALUE  OP  THE  DIFFERENT  KINDS  OF  HAY  USED  IN  THE 
PRODUCTION  OF  2,924,164  POUNDS  OF  MILK  (ETC.) 


Hay 

Value 

Weight 
in 
pounds 

Value  per 
cwt. 
of  milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Alfalfa  

$3307.89 

428  363 

$0.1131 

14.6491 

Mixed  

1  167.26 

190  107 

.0399 

6.5012 

Clover  

1  141.82 

214  895 

.0391 

7.3489 

Timothy  

1  087.32 

176  881 

.0372 

6.0489 

Oat  and  pea  

85.43 

15  623 

.0029 

.5343 

Millet.  . 

28.57 

9524 

.0010 

.3257 

Wild  

20.80 

9000 

.0007 

.3078 

Total  

$6839.09 

1  044  393 

$0.2339 

35.7159 

Other  Roughage. — "Other"  roughage  constituted  but  6.4  per- 
cent of  the  value  of  the  total  feed.  In  Table  17  are  shown  the  amounts 
and  values  of  these  forages.  Of  the  29  pounds  necessary  to  produce 
one  hundred  pounds  of  milk,  22  pounds  were  corn  fodder  and  7  pounds 
were  straw.  The  total  cost  was  6.7  cents  per  hundred  pounds  of  milk. 

TABLE  17. — AiabuNT  AND  VALUE  OF  OTHER  ROUGHAGE  USED  IN  THE 
PRODUCTION  OF  2,924,164  POUNDS  OF  MILK  (ETC.) 


Roughage 

Value 

Weight 

Value  per 
cwt.  of 
milk 

Amount 
fed  per 
cwt.  of 
milk,  in 
pounds 

Fodder  

$1  499  97 

650  763 

$0.0513 

22.2547 

Straw  

466.37 

203  852 

.0160 

6.9713 

Total  

$1  966.34 

854  615 

$0.0673 

29.2260 

Pasture. — In  Table  18  is  shown  the  total  value  of  each  class  of 
pasture  used.    Blue  grass  was  by  far  the  most  important. 

TABLE  18. — TOTAL  VALUE  OF  PASTURE  USED  IN  THE  PRODUCTION  OF 
2,924,164  POUNDS  OF  MILK  (ETC.) 


Pasture 

Value 

Value  per 
cwt.  of  milk 

Oat  stubble  

$     14.00 

$.0005 

Blue  grass  

1  750.33 

.0599 

Alfalfa  

50.00 

.0017 

Clover  

92.08 

.0031 

Cornstalk  

61.45 

.0021 

Timothy  

120.00 

.0041 

Total  

$2087.86 

$.0714 

360 


BULLETIN  No.  216 


Feed  Summary. — The  total  feed  involved  represents  over  one-half 
(55.9  percent)  the  gross  expense  of  producing  the  milk.  In  Table  19 
is  presented  a  summary  of  the  amounts  and  values  of  the  various 
feeds  used.  The  total  feed  cost  was  $1.05  per  hundred  pounds  of  milk. 

TABLE  19.— SUMMARY  OF  ALL  FEEDS  FED  TO  428  Cows  AND  18  BULLS  (446 

CATTLE  UNITS)  IN  THE  PRODUCTION  OP  2,924,164  POUNDS  OF  MILK 

CONTAINING  104,144  POUNDS  OF  FAT 


Feed 

Amount 

Value  per 

fed  per 

Value 

Weight 

cwt.  of 

cwt.  of 

milk 

milk,  in 

pounds 

Gr&io 

$11  857.07 

1  012  253 

$.4055 

34.6169 

Succulent,  feeds  

7  965.16 

4  096  452 

.2724 

140.0976 

Hay 

6839.09 

1  044  393 

.2339 

35.7159 

Other  roughage  

1  966.34 

854  615 

.0673 

29.2260 

Pasture  

2087.86 

.0714 

Total  

$30715.52 

$1.0505 

LABOR 

Man  labor  and  horse  labor  are  important  factors  in  milk  produc- 
tion; in  the  present  study  they  constituted  nearly  one-fourth  (23.7 
percent)  of  the  gross  expense.  It  will  be  seen  from  Table  20  that  to 
produce  the  2,924,164  pounds  of  milk,  69,098.25  hours  of  man  labor 
were  required.  This  is  2.36  hours  (37  cents)  per  hundredweight  of 
milk.  One-half  hour  (.523)  of  horse  labor  was  utilized  in  the  pro- 
duction of  one  hundred  pounds  of  milk. 

TABLE  20. — AMOUNT  AND  VALUE  OF  LABOR  USED  IN  THE  PRODUCTION  OF 
2,924,164  POUNDS  OF  MILK  (ETC.) 


Amount 

Value  per 

used  per 

Kind  of  labor 

Total  value 

Total  hours 

cwt.  of 

cwt.  of 

milk 

milk,  in 

pounds 

Man  labor  

$10821.97 

69098.25 

$.3701 

2.3630 

Horse  labor  

2207.65 

15289.75 

.0755 

.5229 

EQUIPMENT 

In  Table  21  is  shown  the  various  items  involved  in  the  equipment 
cost.  It  will  be  seen  that  the  net  cost  of  equipment  constitutes  a  rela- 
tively small  portion  of  the  total  cost  of  milk  production. 

Of  the  total  equipment  cost,  depreciation  represents  57.7  per- 
cent; repairs,  20.7  percent;  interest,  21.0  percent;  and  taxes,  0.6 
percent. 

BUILDINGS 

The  buildings  necessary  to  house  the  428  cows  and  18  bulls  con- 
stituted about  4  percent  of  the  gross  expense  of  producing  the  2,924.164 
pounds  of  milk. 


1910] 


THE  COST  OF  MILK  PRODUCTION 


361 


TABLE  21. — COST  OP  DAIRY  EQUIPMENT  USED  IN  THE  PKODUCTION 
2,924,164  POUNDS  OP  MILK  (ETC.) 


Value  of  equipment  at  beginning  of  the  period..  .  . 
New  equipment  

$1  083.70 
1  227.77 

Initial  inventory  and  purchases  

$2311.47 

Value  of  equipment  at  end  of  period  

$1  871.40 

Equipment  sold  

236.75 

Final  inventory  and  sales  

2  108.15 

Depreciation  

$203  32 

Eepairs  

$72  75 

Taxes  

2.04 

Interest  on  average  value  of  equipment 
($1,477.52  at  5  percent)  

73  88 

148  67 

Net  cost  of  operation  

$351.99 

STOCK 

In  order  to  maintain  milk  production,  it  is  necessary  to  continu- 
ally change  the  milking  stock.  To  maintain  the  herds  on  the  farms 
studied  at  an  average  of  428  cows,  95  cows  were  sold,  45  cows  were 
bought,  and  66  heifers  freshened.  Eight  cows  which  died  during  the 
time  of  the  study  represent  about  2  percent  of  the  average  number 
of  cows.  The  farmers  aim  to  keep  the  cows  as  long  as  they  are 
economical  producers  and  try  to  dispose  of  them  when  they  become 
unprofitable.  The  animals  that  were  sold  represent  22.2  percent  of 
the  total  number  involved.  In  other  words,  the  average  cow  remained 
in  the  herd  about  4.5  years. 

TABLE  22. — NUMBER  AND  VALUE  OF  STOCK  USED  IN  THE  PRODUCTION  OF 
2,924,164  POUNDS  OP  MILK  (ETC.) 


Number 

Average 
value 

Total  value 

Cows  and  bulls  at  beginning  of  period  

443 

$98.14 

$43  476  00 

Cows  purchased  

45 

119  01 

5  355  53 

Heifers  freshened  

66 

74  02 

4885  00 

Total  stock  involved  

554 

$96.96 

$53  716  53 

Cows  and  bulls  at  end  of  period  

451 

$94  66 

$42  692  00 

Cows  sold  

95 

67  85 

6  445  48 

Final  stock  plus  sales  

546 

$90.00 

$49137.48 

Depreciation  

$4579.05 

INTEREST  ON  VALUE  OF  LIVE  STOCK 

The  interest  on  the  capital  invested  in  live  stock  ($43,084.00)  at 
5  percent  amounted  to  $2,154.20,  or  7.37  cents  per  hundredweight 
of  milk. 


362  BULLETIN  No.  216  [April, 


Manure  represents  about  one-seventh  of  the  total  income  to  the 
dairy.  The  amounts  included  in  these  calculations  are  those  hauled 
from  the  barn;  they  do  not  include  manure  dropped  on  pasture. 

CALVES 

The  428  cows  produced  363  calves,  which  number  represents  ap- 
proximately 85  living  calves  for  each  one  hundred  cows.  The  casual 
observer  would  probably  think  that  the  cows  should  produce  a  larger 
percentage  of  living  calves,  but  the  failure  of  cows  to  breed  and  the 
losses  from  diseases,  such  as  abortion,  increase  beyond  the  usual  con- 
ception the  expense  of  milk  production. 

MISCELLANEOUS  RECEIPTS 

The  miscellaneous  receipts  include  hides,  $89.65;  beef,  $37.60; 
bull  service,  $6tOO ;  feed  for  hogs  following  cows,  $11.25 ;  milk  haul- 
ing, $54.50;  and  feed  bags,  $47.30.  They  amounted  in  total  to  less 
than  one  cent  ($.0084)  per  hundredweight  of  milk. 

NET  Cow  COST 

Table  23  presents  a  summary  of  all  the  factors  of  expense  and 
of  income  except  milk,  involved  in  the  production  of  2,942,164  pounds 
of  milk  from  446  cattle  units. 

From  the  above  table  it  is  seen  that  the  value  of  the  feed  not 
pasture  ($0.9791  per  hundredweight  of  milk)  plus  the  value  of  man 
labor  ($0.3701)  constituted  79.58  percent  of  the  net  cost  of  producing 
the  milk  ($1.6953).  In  other  words,  the  total  value  of  the  feed  not 
pasture  and  the  man  labor  falls  short  by  20.42  percent  of  represent- 
ing the  actual  net  cost  of  the  milk.  The  reason  for  the  lower  pro- 
portion which  feed  and  labor  constitute  by  this  method  of  calculation, 
as  compared  with  the  herd  cost,  lies  in  the  elimination  of  the  young 
stock  from  the  records.  It  is  of  course  an  obvious  fact  that  pro- 
portionately more  feed  would  be  required  to  produce  one  hundred 
pounds  of  milk  when  the  feed  given  the  young  stock  in  the  herd  was 
included  as  a  part  of  the  cost  of  production,  than  when  only  the  feed 
given  the  producing  cows  and  bulls  was  included ;  and  also,  in  a  study 
confined  to  cow  cost  there  is  no  appreciation  in  value  of  young  stock 
to  offset  various  other  items  of  expense,  as  there  is  in  a  study  in  which 
the  entire  herd  is  included. 

Table  24  shows  in  amounts  as  well  as  in  value  the  man  labor  and 
feed  except  pasture  involved  in  the  production  of  the  2,924,164  pounds 


1919} 


363 


TABLE  23. — SUMMARY  OP  ALL  ITEMS  OF  EXPENSE  .AND  OP  RETURNS  OTHER  THAN 
MILK  INVOLVED  IN  THE  PRODUCTION  OP  2,924,164  POUNDS  OP  MILK  (ETC.) 

EXPENSE 


Item 

Amount 

Percent 
of  total 

Per  cwt. 
of  milk 

Feed  not  pasture  

$28  627  66 

52  2 

$0  9791 

Pasture  

2  087  86 

3  8 

0714 

Man  labor  

10  821  97 

19  7 

3701 

Depreciation  in  value  of  stock  

4  579  05 

8  3 

1566 

Horse  labor  

2207.65 

4.0 

.0755 

Interest  on  value  of  stock  

2  154.20 

3.9 

.0737 

Buildings      

2  128.89 

3.9 

.0728 

Miscellaneous  

1  889.77 

3.5 

.0646 

Equipment  

351.99 

.7 

.0120 

Total  

$54849.04 

100.0 

$1.8758 

RETURNS  NOT  MILK 


Manure                                     .    .        ..... 

$3  943  88 

$.1349 

Calves                           .      .        

1  089  00 

.0372 

Miscellaneous  

246.30 

.0084 

Total  

$5279.18 

$.1805 

NET  YEARLY  COW  COST  

$49569.86 

$1.6953 

TABLE  24. — AMOUNT  AND  VALUE  OP  MAN  LABOR  AND  OP  FEED,  EXCEPT  PASTURE, 
USED  IN  THE  PRODUCTION  OP  2,924,164  POUNDS  OP  MILK  (ETC.) 


Item 

Value 

Amount 

Value  per 
cwt.  of 
milk 

Amount  per 
cwt.  of 
milk 

Man  labor  

$10821.97 

69  098  25  hrs. 

$0.3701 

2.  3630  hrs. 

Grain  

11  857.07 

1  012  253  .  00  Ibs. 

.4055 

34.  6169  Ibs. 

Silage  

7  965  .  16 

4  096  452.  00  Ibs. 

.2724 

140.  0976  Ibs. 

Hay  

6839.09 

1  044  393.  00  Ibs. 

.2339 

35.  7  159  Ibs. 

Other  roughage.  .  .  . 

1  966.34 

854  615.  00  Ibs. 

.0673 

29.  2260  Ibs. 

Total  

$39449.63 

$1.3402 

of  milk.  On  this  basis  the  approximate  cow  cost  of  producing  one 
hundred  pounds  of  milk  may  be  secured  by  adapting  prevailing  prices 
to  the  following  quantities  of  feed  and  labor  and  dividing  this  amount 
by  79.58  percent  or  by  adding  25.6  percent  of  the  value : 

Grain 35  pounds         Hay 36  pounds 

Silage 140  pounds         Other  roughage     29  pounds 

Man  labor   2.36  hours 

The  use  of  these  amounts  presupposes  that  the  prices  of  all  items 
included  change  more  or  less  in  unison  and  also  that  the  cost  of  each 
item  not  included  fluctuates  with  some  one  of  the  items  that  is  in- 
cluded :  e.  g.,  the  cost  of  horse  labor  fluctuates  with  the  price  of  feed ; 
the  depreciation  of  stock  changes  with  the  price  of  feed  and  labor; 
at  the  same  time  credits  not  milk,  such  as  manure,  change  with  the 
price  of  feeds.  Altho  these  fluctuations  never  occur  in  exact  unison, 


364  BULLETIN  No.  216 

they  are  never  very  far  apart.     Following  is  an  illustration  of  how 
the  formula  may  be  used : 

Grain 35  Ibs.      @  $55  per  ton    =  $0.96 

Silage 140  Ibs.      @      6  per  ton    =      .42 

Hay  ._.    36  Ibs.      @    10  per  ton    =      .18 

Other  roughage  29  Ibs.      @      6  per  ton   =      .09 

Man  labor    2.36  hours  @  25c  per  hour  =      .59 

$2.24 

Add  25.6  percent  of  $2.24 .57 

Yearly  cow  cost  of  milk  per  hundredweight $2.81 

For  a  discussion  concerning  seasonal  variation  in  cost,  the  reader 
is  referred  to  page  356. 

CONCLUSIONS 

The  cost  of  producing  one  hundred  pounds  of  milk  may  be  de- 
termined by  computing  either  the  cost  of  maintaining  the  entire  herd 
or  the  cost  of  maintaining  the  producing  stock  alone. 

•  With  the  herd  as  the  basis,  the  approximate  year  cost  may  be 
ascertained  by  applying  current  prices  to  the  following  amounts  of 
feed  and  labor: 

Grain 44  pounds        Hay 50  pounds 

Silage 188  pounds        Other  roughage 39  pounds 

Labor 2.42  hours 

"With  the  milking  stock  as  the  basis,  the  approximate  year  cost 
may  be  ascertained  by  applying  current  prices  to  the  following 
amounts  of  feed  and  labor  and  adding  25.6  percent  to  the  value  thus 
obtained : 

Grain 35  pounds        Hay 36  pounds 

Silage 140  pounds        Other  roughage 29  pounds 

Labor 2.36  hours 

Of  course  when  studies  pertaining  to  costs  are  restricted  to  a 
comparatively  small  number  of  farms  supplying  a  given  market,  cer- 
tain limitations  are  placed  upon  the  data  which  must  be  taken  into 
consideration  when  applying  the  results  to  individual  farms  or  to 
other  districts.  For  instance,  if  high  production  and  superior  skill 
reduce  the  amount  of  labor  necessary  on  the  better  farms,  average 
farm  wages  should  not  be  used  in  determining  the  labor  cost,  but 
rather  the  wages  of  the  superior  class  to  which  the  data  are  applicable. 
The  same  is  true  for  feeds.  Due  cognizance  must  also  be  given  to  the 
ratio  of  winter  milk  to  summer  milk,  for  the  cost  of  producing  the 
former  is  much  the  greater.  In  the  present  study  the  lower  cost  of 
production  resulting  from  the  fact  that  better  farms  were  involved 
tends  to  counterbalance  the  higher  cost  of  the  large  proportion  of 
winter  production,  but  it  is  impossible  to  say  with  exactness  which 
factor  exerts  the  greater  influence. 


UNIVERSITY  OF  ILLINOIS-URBANA 


